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How Covid Has Affected the Biodiesel Industry

Under ordinary circumstances, the strength of a Biodiesel manufacturing company like New Leaf Biofuel is how it operates at the intersection of so many different industries — agriculture, transportation, engineering, food and hospitality. However, under the circumstances of the COVID-19 pandemic, this unique positioning has left the biodiesel industry impacted in profound ways. 

To get the full picture, it helps to understand the different pandemic-induced pressures existing around New Leaf’s biodiesel process. When restaurants were  closed in March, the feedstock (cooking oil that is collected and converted to biodiesel) was suddenly and drastically depleted. “We lost almost all of our oil except from our fast food restaurants or those that quickly pivoted to takeout,” explained Jennifer Case, CEO of New Leaf Biofuel. “It was a big challenge.” With very little cooking oil coming in, the company was unable to produce the same level of biodiesel as they were accomplishing pre-pandemic. 

Complicating these already impaired conditions, the economic downturn in the spring of this year deeply affected fuel prices across the board — biodiesel included. The pricing of biodiesel is connected to the pricing of heating oil, existing in contracted equations that add or subtract (though usually subtract) a set amount from the current price of heating oil to determine what biodiesel will cost. When the market crashed in February, the price of heating oil followed a similar trajectory, plummeting the price of fuel so low that companies were actually paying their clients to take the product. 

Thankfully, our industry was able to make up some of the loss with the sale of the carbon credits that they’ve accrued in the manufacturing of the biofuel.

On the other side of operations, biofuel is similarly stagnated. With life so significantly altered for many Americans, people are shopping less, goods are being transported less, and the trucks that run on the biodiesel are taking less trips. “Companies like Amazon and all the delivery services have actually stepped up how much they deliver, so it is trending a little back towards some normalcy,” said Case. “But as long as we keep having waves of COVID where restaurants close and waves of COVID where demand for products and services is down, those two things may never get back to the way they were.” 

Since many restaurants have reopened for varying degrees of service, Case estimates that New Leaf is back to collecting about 70% of the oil they were obtaining before closures. As the country at large and individual communities find their ways to persevere and create a new normal, Case expressed that what she and the New Leaf team look forward to most is being able to be back in the office together and the completion of their plant expansion which has been held up by Pandemic-related delays. 

While COVID-19 has thrown biofuel and its interconnected industries into a flux that they have not fully recovered from, on a local level, the relationships fostered between New Leaf and the restauranteurs they collect used cooking oil from have remained strong and a bright spot in the obfuscated bigger picture. When the effects of the pandemic have quelled and New Leaf is back to peak operations, this support will leave them in a great position to not just bounce back, but to expand and excel.

 

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